Canada: Macqueen Class Action Struck Out Re Sydney Tar Ponds

Last Updated: January 27 2014
Article by Dianne Saxe

The Nova Scotia Court of Appeal has struck out the groundbreaking class action that had been certified relating to contamination from the Sydney Tar Ponds and the associated steel and coke plants: MacQueen v. Ispat Sidbec Inc. This is another major setback to plaintiffs in contaminated land cases, following the lead of the Supreme Court of Canada in Smith v Inco.

In the MacQueen class action, landowners and residents of the Sydney, Nova Scotia, Tar Ponds area claim to have suffered substantial health and economic damages as a result of contaminants emitted from the steel and coke works that used to operate in their neighbourhood. They brought a class-action seeking substantial damages and other remedies against the federal and provincial governments, and against the former private sector operators.

"For close to a century, steel was produced in the heart of Sydney, Cape Breton. The steel works which opened in 1903 consisted of two different facilities: (a) a steel plant, and (b) coke ovens where coke was produced for use in the plant. The coke ovens closed in 1998 and the steel plant in 2000. With that closure ended the history of steel-making in industrial Cape Breton."

The steel plant was originally privately owned. It lost a great deal of money, and was scheduled to close in 1967. It was kept going for political reasons by large injections of public funds, which included the federal and provincial governments acquiring ownership and control of the plants. This was done to meet local demands to keep the plants operating, because they were major local employers and customers for local coal mines, the economic engines of Cape Breton.

In particular, the provincially owned Sydney Steel Corporation ("Sysco") operated the steel works from 1967 until its closure in 2000, and operated the coke ovens until their closure in 1998, except for a temporary closure between 1983 and 1985, and except for the six years between 1968 until 1974 when a federal Crown corporation (Devco) owned and operated the coke ovens. Devco, which was created pursuant to the Cape Breton Development Corporation Act, R.S.C., 1967, c. C-6, was dissolved pursuant to the Cape Breton Development Corporation Divestiture Authorization and Dissolution Act, S.C. 2000, c. 23. Its legal successor is the Attorney General of Canada, i.e. all Canadian taxpayers. If Devco had not been dissolved, federal liability might have been limited to its (negligible) assets. (Has anyone been held liable for this blooper?)

The claims against the private interests have been settled. Accordingly, the only remaining claims are those against the federal and provincial governments for emissions after 1967. This is the class action that was certified at first instance, and whose certification has now been overturned. The plaintiffs claim, as repeatedly amended, is summarized as:

"The Statement of Claim alleges that the operations of the steel plant and coke ovens spewed hundreds of thousands of tonnes of contaminants, including heavy metals, polycyclic aromatic hydrocarbons and dangerous respirable particulates into the air, water and soil of Sydney; such contaminants and others accumulated in the former tidal flats adjacent to Sydney Harbour at the mouth of Muggah Creek, known as the Sydney Tar Ponds; the remediation plan proposed by Canada and Nova Scotia fails to address the impacts of the contamination on its residents and their property; and the exposure to the contaminants continues. According to the Statement of Claim, Canada, Nova Scotia and Sysco knew or were substantially certain from various studies conducted over the years that the respondents and class members would inhale, ingest and have dermal contact with the contaminants directly resulting from their operations of the steel plant and coke ovens. It says that they suppressed that information or deliberately presented misinformation in order to deny or conceal the harm to the environment, property and the risk to the health of the respondents and class members.

In the Statement of Claim, the respondents specify that they do not seek recovery of damages for the individual personal injuries and health problems they and other class members have allegedly suffered. The remedies they seek include cessation of exposure by either remediation by removal of contaminants from the properties or relocation of residents; the implementation of a medical monitoring program consisting of a largescale epidemiological study and an education program; damages for nuisance for the exposure and substantial interference to the enjoyment of their properties; and damages for the intentional tort of battery or alternatively, for negligent battery. In addition to battery and nuisance, the Statement of Claim alleges that Canada, Nova Scotia and Sysco are liable to the respondents and class members for trespass, negligence and breach of fiduciary duty based on their ownership and operation of the steel works."

The certification judge had certified the class proceeding based on several causes of action, including Rylands v. Fletcher. The Court of Appeal set aside the certification order, because the individual issues overwhelm the common issue.

The Court of Appeal dismissed most of the original causes of action, leaving only negligence, nuisance and breach of fiduciary duty as potential common issues. The nuisance claims were dependent on findings of fact that would have to be made for individual class members, who suffered various effects. Although the contaminants posed risk to all class members, it was relevant whether or not each potential plaintiff had suffered material physical damage, and this must be determined individually. On the issue of negligence, whether a duty of care was owed is an individual issue based on timing of ownership of property and when the alleged harm took place.

With respect to the Rylands v. Fletcher claim, the Court of Appeal refers extensively to Inco. With respect to the "non-natural use of land" part of the test, the court says (at para. 63): "the authorities do not support the argument that operating a steel mill or coke ovens alone constitutes an unnatural use of land," but accepts the pleading that the use of the land for the release of contaminants could create an abnormal risk, which could meet this part of the test. However, with respect to the "escape" part of the test, the court adopted the reasoning in Inco that an escape must be accidental or unintended – therefore, the intentional release of contaminants as the ordinary and regular by-product of the industrial activities does not constitute an "escape."

Thus, the class action against both the federal and provincial governments was struck out. Plaintiffs can attempt to pursue individual claims on the three remaining causes of action, but this is much more expensive, and they may have considerable difficulty finding legal counsel willing to do so on a contingency basis.

MacQueen v. Ispat Sidbec Inc., 2013 NSCA 143, reversing 2011 NSSC 484, 985 A.P.R. 354, 311 N.S.R. (2d) 354, 25 C.P.C. (7th) 318

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Dianne Saxe
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